PERTH: Oil prices rose as much as 1.5% on Monday after OPEC+ members reaffirmed a plan to pause production increases in the first quarter of next year and the prospect of U.S. action against oil producer Venezuela unsettled the market.
Brent crude futures later pared gains to sit up 0.98%, or $62.99, a barrel by 0052 GMT. U.S. West Texas Intermediate crude was at $59.12, up 57 cents, or 0.99%.
The Organization of the Petroleum Exporting Countries and allies initially agreed on the pause in early November, slowing a push to regain market share amid fear of a supply glut.
After a meeting on Sunday, OPEC+ said it “reaffirmed the importance of adopting a cautious approach and retaining full flexibility to continue pausing or reverse the additional voluntary production adjustments”.
Commonwealth Bank of Australia analyst Vivek Dhar said the Sunday outcome widely expected considering the earlier decision.
“Market worries of a growing glut in global oil markets has likely played a role in the OPEC+ decision,” Dhar wrote in client note.
U.S. President Donald Trump’s move to close Venezuelan airspace created fresh uncertainty in the oil market given the South American nation is a major oil producer.
In a client note, ING analysts wrote that “adding support to the market is increasing supply risks for Venezuelan crude oil after President Trump said he’s considering closing the airspace over the nation”.
Trump on Sunday said he had spoken with Venezuela’s President Nicolas Maduro but did not give details, nor did he expand on his airspace comments or whether they signalled military strikes against the nation.
“Don’t read anything into it,” Trump said.
In Europe, increasing uncertainty around a Russia-Ukraine peace deal reversed bearish sentiment of the past two weeks, when a peace deal looked closer and raised the prospect of large volumes of currently sanctioned Russian oil flooding the market.
Ukraine’s military via social media on Saturday said it had hit a Russian oil refinery, as well as the Beriev military aviation plant in Rostov region.
Separately, Ukrainian naval drones hit two sanctioned tankers that were heading to a Russian port on the Black Sea to pick up oil for foreign markets.
Ukrainian and U.S. officials met on Sunday in the U.S. state of Florida for a meeting about the war that U.S. Secretary of State Marco Rubio called “very productive”. He said more work is needed to end the war, now deep into its third year.
